Tires moving off the shelves of a wholesale distributor’s warehouse, into a retailer’s service bay and ultimately onto a consumer’s vehicle is somewhat a natural process.
The vehicle’s tires are worn and in need of replacement. A tire dealer sells the consumer a new set and orders the stock from a nearby warehouse. It’s a cycle that repeats itself over and over again.
But there can be many bumps in that road from shelf to sellout. From the economy affecting store traffic, consumer brand preferences and ticket totals to production and shipping snafus that upset the norms of inventory management and replenishment, tire dealers on both sides of the equation operate at the mercy of other forces.
And just like their retail customers, wholesalers are facing stiff competition in their markets.
Matt Leeper, vice president of sales and vendor relations at Tire Distributors of Georgia Inc., says “it’s ultra-competitive. There’s over 10 wholesale distributors in our area and there’s less brand exclusivity, so you can’t differentiate yourself with a brand as much as you used to be able to.
“Most brands are with a handful of distributors, so the dealer can buy the same products at close to the same price from three, four or five distributors.”
That means distributors need to find ways to stand out.
David Priddy, owner of David’s Discount Tires Point S in Haskell, Okla., manages about 120,000 square feet of racked warehouse space outside of Tulsa. His 13 trucks cover nine routes that blanket Oklahoma and cross into the neighboring states of Arkansas, Kansas, Missouri and Texas.
Priddy says it all comes down to customer service.
“Service is definitely the thing. The big giants (in wholesaling) can’t bend the rules. We can bend them at our size. We take care of our customers,” he says. “I just feel like we’ve got the best prices, the best brands, the best quality.”
He believes affiliations with tire brands matter, and says he’s not interested in carrying low-priced, low-quality tires. “We don’t sell junk, and a lot of people do. You’re the hero at the front (but) you’re the zero when it blows out or wears out.”
He does believe in private and exclusive brands and says major brands only account for about 25% of his overall inventory. Since joining Point S in 2016 — Priddy also operates a retail store dba David’s Discount Tires Point S — he’s gained access to Blackhawk, Fortune and Pantera tires.
In the Northeast, K&W Tire Co. Inc. doesn’t want to be a jack-of-all-trades wholesale tire distributor. Jeff Short, vice president of sales, says the company is more specialized than that. He calls its product mix “carefully curated” and “hand-picked.”
But that’s just one way K&W Tire works to stand out from the others serving its market — which stretches from Baltimore, Md. through New England and up to the Canadian border. The company operates seven warehouses in the region.
K&W Tire proudly tells customers “we’re a little different” on its website. The company lays out 13 reasons to make its point, while also publicizing how many tires it has in stock, how many tires were sold the previous month, as well as the number of customers it served in the prior month. (For the curious, the most recent numbers are 126,092 tires in stock; 32,309 tires sold and 1,358 customers served last month.)
Short says K&W Tire specializes in brands that fill slots in tier two and lower, though he notes that doesn’t mean the wholesaler’s customers position them that way.
“One of our most important brands is Cooper, and Cooper dealers are very loyal to Cooper. As long as things are going well with the product, they stick to it. We have had a couple of new launches since Goodyear took over Cooper and the launches have been homeruns,” Short says.
“If you talk to a Cooper Medallion dealer, he thinks of Cooper as his premium offering. They’re proud of it. They stand behind it.”
And while brands do matter, Short says it’s the people at K&W Tire who differentiate the company from its competitors.
“I think it’s all about the people. People choose to buy from people they like. It starts and stops right there. Everyone has the same products, except for maybe an entry level tire that you have an exclusive on, but it’s totally about people. It’s a people business, and if we didn’t have relationships with these people that go back in many cases decades, it wouldn’t be the same.”
That’s true in his own case. Short has been with K&W for 35 years, and he currently works with a third-generation customer.
Managing co-op funds
There is another piece of this puzzle that has grown increasingly more complicated for these wholesale distributors to manage — the co-op dollars that tire manufacturers provide. (Co-op dollars are sometimes called backside funds or support funds.) This accrual, based on the distributor’s purchases, is designated for branding and promotional efforts.
“Our manufacturer reps contact us and constantly want us to do something with their co-op funds,” Short says.
“But they all have rules, lots of rules and regulations and how their brand is to be presented — which is fine. If they’re going to give you the money, that’s their right to call the shots. But it’s increasingly difficult” to spend the money in a manner that spreads it around to K&W’s tire dealers. Because as Short notes, the reason a wholesaler has this pot of funds is because its customers purchased those tires.
Short says in the past those co-op funds were used to buy newspaper advertisements, “but that ship has sailed.” More recently, the company has used the funds for customer events, and even to support charities, such as a local soup kitchen that provided Thanksgiving meals.
“I think most people in our business would probably prefer to just get the money, versus having to jump through hoops — just reduce the price of the tire.”
But if tire manufacturers insist on maintaining the co-op fund model that focuses on advertising, then Short says they should acknowledge “most tire dealers aren’t experts on advertising or marketing.” So why not supply the dealer with a plug-in that contains pre-built ads and promotions optimized for social media platforms. The wholesaler could share those with its customers who are buying and selling those specific brands.
“It would be great. I love to think of ways to support the dealers,” Short says.
Leeper at Tire Distributors of Georgia is also trying to come up with some unique ways to utilize those co-op funds. “You spend a lot of time on what promotion is going to get the most traction. It can be challenging.”
Adding to the complications is that every tire manufacturer has its own program, and its own set of rules, which means wholesale distributors are juggling multiple programs and buckets of co-op funds every day.
“It can be like a chess game,” Leeper says.
Tire Distributors of Georgia has tried to inject creativity into the game, using co-op funds to create monthly promotions to stir up sales, but also engagement with its customers.
During the first quarter the wholesaler promoted the Falken brand with a “step up to the plate” promotion. Retail customers who are also Falken Fanatics dealers simply needed to increase purchases enough to move up a level within the Fanatics program to earn seats in a suite for a baseball game at Truist Park, the home of the Atlanta Braves. The promotion was also open to Falken commercial tire buyers, and the number of seats and games depended on total units purchased.
Leeper is now working to disperse the 320 tickets to the winners.
Last year during the Christmas season, a promotion for Nokian included a cash bonus for purchases, plus a photo contest seeking “the most festive photo featuring a Nokian tire” purchased from Tire Distributors of Georgia. There was just one caveat: “No serious pictures, please.” Yoder’s Tire and Service won the $2,000 top prize for a picture of a Nokian-outfitted sleigh with fire shooting out the engine and underneath the tires.
When the wholesaler added Nexen to its product mix in 2023, a photo contest asked customers to show how they were “flexen with Nexen.”
“It was a newer brand for us. It got the ball moving,” Leeper says. “Especially in tier two, you’ve got to work to get it going. That was an effective launch promo for that one.”
For Tire Distributors of Georgia, Leeper says it boils down to “fun marketing, serious service.”
